The good news is that foreclosure filings in Colorado barely rose from 2008 – only a 0.23 percent increase, according to a national report.

The bad news is that Colorado still is ranked No. 10, according to RealtyTrac, based in Irvine, Calif.

The report showed 50,514 total properties in Colorado with some kind of foreclosure action, which equates to 2.37 percent of all housing units in foreclosure. The U.S. average is 2.21 percent.  The report also shows one out of every 42 households in foreclosure, compared with one of every 45 for the U.S. average. Foreclosure activity in Colorado, according to RealtyTrac, rose 28.2 percent from 2007, far below the 120 percent average national increase.

“It’s kind of bizarre that Colorado is still in the top 10,” said Ryan McMaken, noting that the overall rate in Colorado is very close to the national rate. Also, Colorado’s foreclosure activity has been basically flat, while it is still rising in many other parts of the country.

“RealtyTrac combines all of the different kind of foreclosure actions,”McMaken noted, while he separates new filings and homes that actually go to foreclosure sales.

“If you dig deeper, you will find that while our filings are still climbing, the number of sales are going down,” as banks work with borrower to modify loans, he noted. “We do show a net increase in activity, and we probably will continue to do so, as long as the number of filings continue to rise.”

Still, rather than the 10th worst state in the nation as far as foreclosures, he said Colorado is really more in the middle of the pack, he said. That is also affirmed my Mortgage Banker Association numbers, which shows Colorado in the middle of the U.S., as far as delinquent loans.

An earlier report by InsideRealEstateNews.com found that while foreclosure filings in the Denver area rose by 6.4 percent in 2009 from 2008, most of the percentage increases were found in Boulder, Broomfield and Douglas counties, while activity was flat or dropped slightly in Denver and Adams county. (For that report, please visit this blog.)

Nationwide, RealtyTrac  found more than 3.9 million foreclosure actions -  default notices, scheduled foreclosure auctions and bank repossessions — were reported on 2. 8 million properties in the U.S.  in 2009, a 21 percent increase in total properties from 2008 and a 120 percent increase in total properties from 2007.

Four states accounted for more than 50 percent of the nation’s 2009 total, with more than 1.4 million properties receiving foreclosure filings in California, Florida, Arizona and Illinois. And almost half of those – 632,573 – were in California.

“That means that 46 other states split the remaining half,” noted McMaken. He said some people might think that the foreclosure pain was spread fairly evenly among the states, but that is not the case.

“What that means a lot of states are clumped together, and there will be a very small percent separating them,” McMaken said.

Foreclosure filings were reported on 349,519 U.S. properties foreclosure filings  on 349,519 U.S. properties in December, a 14 percent jump from November  and a 15 percent increase from December 2008 — when a similar monthly jump occurred. Despite the increase in December, foreclosure activity in the fourth quarter decreased 7 percent from the third quarter, although it was still up 18 percent from the fourth quarter of 2008.

“As bad as the 2009 numbers are, they probably would have been worse if not for legislative and industry-related delays in processing delinquent loans,” said James J. Saccacio, chief executive officer of RealtyTrac.

“After peaking in July with over 361,000 homes receiving a foreclosure notice, we saw four straight monthly decreases driven primarily by short-term factors: trial loan modifications, state legislation extending the foreclosure process and an overwhelming volume of inventory clogging the foreclosure pipeline. Despite all the delays, foreclosure activity still hit a record high for our report in 2009, capped off by a substantial increase in December. In the long term a massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond as lenders gradually work their way through the backlog.”

Nevada led the nation last year, with more than 10 percent of the homes receiving some type of a foreclosure action in 2009, giving it the dubious distinction of being No. 1 for foreclosures for the third consecutive year.

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.

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For example, the report shows rental rates rising in the Boulder/Broomfield market.

“But rents are not increasing, if you compare the same product over the same product,”  said Allredge, of Jericho Properties Realty in Lakewood. “The product is simply more expensive in those markets. It’s all about the mix. Rents are soft throughout the metro area.”

And yet, overall, he thinks that the worst may be over for the housing rental market.

“I would say I am cautiously bullish,” Allredge said. “I think we all agree from a landlord’s perspective, we are showing signs that we are heading in the right direction.”

Although the overall third-quarter vacancy rate for housing rentals rose to 4.6 percent from  atypically low 3.4 percent in the third quarter 2008, it is down from 5.2 percent in the second quarter.

“It’s still below 5 percent, which is considered good, and it is hard to imagine it can fall much below 3.4 percent, so it is not shocking it is up from a year ago,” said Ryan McMaken, spokesman of the Colorado Division of Housing, which released the report authored by University of Denver Business Professor Gordon Von Stroh.

Although vacancy rates typically drop from the second quarter to the third quarter for seasonal reasons, the overall trend of low vacancies is positive, Allredge said.

“The market is really pretty flat for rental rates,” Allredge said. “But I think there is reason for some optimism with some job formation and with unemployment dropping, Denver is a bit ahead of the curve compared to the rest of the country. We never became as overbuilt as other parts of the country did. The laws of supply and demand really do work, if you let them.”

Allredge also said that the so-called “shadow market,” seemed to have peaked last year and early this year. The shadow market, discussed in an earlier blog, is a hard-to-count inventory of homes. Part of the shadow market comes from people unable to sell their homes who are renting them, and some of it is owned by banks that have yet to put them on the market.

“That is the majority of our new product in our (rental) portfolio,” Allredge said. “We get very few properties bought by investors with the idea of immediately putting them into the rental pool. But I do think the shadow market had a bigger impact last year and the first part of this year. Foreclosures seem to be softening a bit.”

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.

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Movement in new foreclosure filings was mixed.  Arapahoe, Boulder, Larimer and Mesa Counties all reported sizable increases year over year, while Adams, Denver, Douglas, El Paso, and Weld Counties reported decreases in foreclosure filing activity over the same period.

Decreases were more widespread with foreclosure sales. Sales totals dropped in all counties except Boulder and Mesa Counties. Adams, Arapahoe, and Denver reported year over year decreases of over 30 percent.

Overall, foreclosure sales fell 30 percent, year over year.

Foreclosure filings in several counties.

Foreclosure filings fell 7.1 percent from September to October and foreclosure sales fell 9.8 percent.

Comparing year-over-year, foreclosure sales fell 30.1 percent overall with totals falling from 2,171 to 1,518.

Mesa County reported the largest increases in sales activity with an increase of 225 percent. Foreclosure sales also increased significantly in Boulder County with an increase of 28 percent.

Foreclosure  filings totals fell 7.1 percent overall from September to October of this year, with totals falling from 3,480 to 3,234.

Totals fell in every county except Denver County and Mesa County where they increased 6 percent and 21 percent respectively.

Pueblo reported the largest fall in totals with a decline of 37 percent.

Foreclosure sales totals increased 21 percent overall from September to October of this year, with totals rising from 1,682 to 1,518.

Only Boulder County reported a sizable increase during this period with an increase of 18 percent. All other counties surveyed reported decreases, with the largest decreases occurring in El Paso and Larimer Counties.

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.

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In the seven-county area, there were 7,109 foreclosure filings in the third quarter, compared with 4,365 in the third quarter 2008. The biggest jump in each county – Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas and Jefferson – occurred in August compared with August 2008.

However, the jump in foreclosures was expected to some extent, because of a new state law that went into effect in August 2008. The law, HB 1402, requires lenders to send out letter to delinquent borrowers 30 days before foreclosure filings. That led to August 2008 foreclosure filings to be abnormally low. Overall, August filings were up 165 percent from August 2008.

‘It would seem that for year-over-year comparisons, the implementation of HB 1402 last year is certainly the most important factor in making that comparison,” said Ryan McMaken, spokesman for the Colorado Division of Housing.

“The September numbers from 2008 are also exceptionally low, and this seems to be related to the drop in totals brought on by 1402 as well,” he added. ” Looking at the numbers from earlier in 2008, monthly totals were up around 400 to even 600. They only really climbed to that level again in April of this year, and numbers have remained solidly high this year. So while the drop in August and September of last year does show an extremely large increase year-over-year, the numbers for July, August, and September of this year appear to be near the highest rates we’ve seen in the last couple of years.”

McMaken also noted that in the Denver metro area last year, the increase from September to October was more than 50% from 1,623 to 2,520. And in both 2007 and 2008, the fourth quarter experienced larger filings totals than the third quarter.

” Both facts lead us to not expect the fourth quarter to register significant drops in totals as compared to the third quarter,” he said

However, there also were jumps in September filings from a year earlier, although not as great as in August from August.

“I don’t think we will see any big decrease of any kind from here on out to the end of the year,” McMaken said.

In the first nine months of the year, there were 20,260 filings, a 5.4 percent increase from the 19,226 filings in the first nine months of 2008.

“I’m not surprised with the 5 percent increase,” McMaken said.

He noted that foreclosures also were expected to rise because lenders had declared voluntary moratoriums on pursuing last fall, which ended in the spring. Many lenders used that time to beef-up their departments to work with homeowners delinquent on their mortgage payments, he said.

And that segues into the bright spot in the foreclosure numbers.

“Lenders appear much more willing to work with borrowers on things like loan modifications more than they did in the past,” said Carol Snyder, public trustee for Adams County.

In the third quarter of this year, 746 homes went to the public trustee auctions, a 32.9 drop from the 1,113 foreclosure sales in the third-quarter of 2008.

“To me, that indicates that lenders are working with borrowers to let them modify their loans or refinance,”  she said.

“That is certainly what I am hearing and what foreclosure counselors are hearing,” McMaken said.

Some distressed borrowers, for example, are being offered 4 percent mortgages that are amortized over 40 years, allowing owners who were behind on their mortgages able to stay in their homes.

Tom Cryer, a broker with the Kentwood Co., last week said that lenders also may be reluctant to take possession of homes and put them on the market. He said that lenders may be hoping that the Obama administration will buy the homes or the delinquent loans from them at a better price than they they would flood the market with foreclosed homes.

“A lot of brokers walk around neighborhoods and we see vacant homes, which clearly are foreclosures,” Cryer said. “But these homes are not reflected in our numbers. If they were, the number of unsold homes on the market would be much higher.”

McMaken noted that the Treasury Department has bought up so many toxic loans that it has kept mortgage rates low, providing some relief to the housing market.

He said there are few signs that a a huge increase in demand is brewing that would allow the market to bail out the depressed housing market in the Denver area or across the nation.

And with unemployment growing and a wave of mortgage rates adjusting higher, many economists and observers expect another wave of foreclosures.

County	July 2008	July 2009	August 2008	August 2009	September 2008	September 2009
Adams	511	490	266	537	328	429
Arapahoe	454	590	167	554	348	555
Boulder	108	245	46	132	47	170
Broomfield	25	34	9	27	24	19
Denver	470	634	148	550	361	453
Douglas	176	222	111	284	53	234
Jefferson	352	390	151	301	210	359
Total	2,096	2,505	898	2,385	1,371	2,219
Percentage Change		19.5%		165%		61.8%

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Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865

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